Recent confirmation that DC contracting-out is to be abolished completely in 2012 (see Aries article) has triggered some consternation in the industry about the consequential block on transfers of GMP or s.9(2B) rights to money purchase schemes. Such rights can only be accepted by a scheme which promises to provide protected rights in return for those benefits, but from 6 April 2012 that will be impossible, as things stand. Protected rights won't exist: all the legislative references are to be scrapped. A significant increase in ETV (enhanced transfer value) exercises has been predicted, with an apparently narrowing window of opportunity to transfer from a DB scheme to a PP.

Almost as if anticipating a barrage of calls for exemptions, it was reported this week that Minister for Pensions Steve Webb is looking instead at taking the more radical step of ending contracting out across all private and public sector pension schemes, ie including DB schemes. If - and this is a very big if - he also meant that past accrued GMP and S.9(2B) rights will be converted to ordinary scheme benefits (and GMPs equalised along the way), and all the implications for state pension benefits somehow resolved, a great deal of the complexity associated with pension transfers and indeed, UK pensions legislation as a whole, would evaporate. For the DWP, this might be regarded as the holy grail of simplification.

However, it is to be hoped that before this idea is translated into a policy commitment, the implications are thought through, and that Ministers have learned a lesson from the fallout in the wake of the CPI decision. Among the consequences of that decision was, ironically in view of its supposedly beneficial effect, a freeze until at least 1 October 2010 on most transfers out of public sector pension schemes (see CLG letters of 6 July and 20 July 2010).